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Medical Aid – Are Medical Aid Contributions Tax Deductible?


Are Your Monthly Medical Aid Contributions Tax Deductible?

Few South Africans are in a position to deny that, without the support of a medical aid fund, they would be totally unable to meet the cost of private healthcare. In addition, it is equally true to say that meeting the monthly membership premium contributions needed to sustain their membership is a feat that has continued to become more of a challenge with each passing year. These increases have been prompted by the rising costs of treatment and the introduction of costly, although vital, new technologies. It is therefore not too surprising that one of the major concerns among those who are looking for cover is whether or not the monthly premium payments will be tax deductible.

The precise conditions that may be applied to this particular expense in any given fiscal year is prone to vary from time to time. However, the short answer to this important question is that fees paid to provide cover for private healthcare expenses do, in fact, qualify for relief. In the past, this took the form of a calculated reduction in the amount of tax to be deducted from the individual claimant. This system, however, was widely seen to favour the more highly paid employees and thus steps were proposed to devise a system that would distribute the intended financial benefits rather more equally. Rather than continuing to consider medical aid contributions as a tax deductible expense, these fees are now subject to a system known as tax credits.

What this means, in simple terms, is that the employer is now tasked with amending the amount of tax paid by scheme members each month, instead of SARS refunding a calculated portion upon evaluating the employee’s annual return. The tax credit system has been phased in over a number of years, while the rebates defined in 2014 have been increased for the current year. Credits now (December 2015) amount to R270 each for the taxpayer making the contributions and his or her first dependent, plus a further R181 per month for each additional dependent member.